Economics

Saving among young households. Evidence from Japan and Italy

Article Abstract:

Microdata for Japan and Italy shows that families and single people save and build up net worth at all stages of their working lives, even when their earnings are low. This goes against the natural assumption that young people will dissave, while older people with higher incomes will save more. In fact, the trend among all households to save or dissave only a very small proportion of their overall resources does not fit in with a rigid life cycle model, and basic versions of the life cycle theory cannot fully explain the saving habits of young consumers. It could be that the optimal consumption pattern is rising at a greater rate than earnings when people are young, giving rise to large savings when a working life commences.

Saving trends and measurement issues

Article Abstract:

There was a general fall in saving rates in most OECD countries during the 1980s, with the most extensive fall being in the government sector. Saving ratios have improved over the last few years, mainly because of changes in government saving policies, and private sector saving has remained relatively stable over the last 30 years. A general review of saving trends over this period produces a range of stylized facts, including that there is a considerable difference in average saving rates across the OECD, that government sector saving behaviour is largely responsible for variations in saving levels and that general saving trends are similar in all OECD countries, indicating the influence of common factors.

A long-run perspective on saving

Article Abstract:

A number of factors have an impact on savings rates, as indicated by a study detailing long-run gross savings rates in 11 countries. These countries account for around 48% of world product in real terms, and most show savings rates which, although low, are still generally much higher than they were in the prewar period. Recent savings trends could therefore be regarded as a return to long term levels after a long period of boom in the postwar era. Current savings rates seem to be negatively dependent on per capita income levels, as the saving level is lowest in the USA, the richest country studied, and highest in Taiwan and Korea, which have comparatively low income levels.